Stein Mart 2010 Annual Report Download - page 36

STEIN MART, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, except per share amounts)
F-12
In the fourth quarter of 2010, we were no longer in a cumulative three-year loss position because the Company’s income in the last two
years exceeded the loss incurred in 2008. Based on this information, along with expectations of future earnings, we reversed our
remaining valuation allowance of $6 million in the fourth quarter of 2010. Our valuation allowance also decreased during 2010 due to
favorable changes in our net deferred tax asset position related to favorable book-tax differences estimated for 2010. Of the $16.7 million
decrease in our valuation allowance for the year, $14.7 million was recorded in the Consolidated Statements of Operations. The remainder
related primarily to a decrease in deferred tax assets associated with stock based compensation recorded in prior years for which a tax
benefit was not realized.
Deferred tax assets (liabilities) are reflected on the Consolidated Balance Sheets as follows:
January 29,
2011
January 30,
2010
Current deferred tax assets
(
included in other current assets
)
$4,003 $ -
Current deferred tax liabilities
(
included in accrued liabilities
)
-
(
2,572
)
Non-cu
r
rent deferred tax assets
(
included in other assets
)
1,970 2,572
Net deferred tax asset $5,973 $ -
The components of income tax provision (benefit) are as follows:
2010 2009 2008
Current:
Federal $10,751 $10,209 $
(
18,927
)
State
(
305
)
361
(
38
)
10,446 10,570
(
18,965
)
Deferred:
Federal
(
4,727
)
286 7,622
State
(
1,280
)
- 762
(
6007
)
286 8,384
Income tax provision
(
benefit
)
$ 4,439 $10,856 $
(
10,581
)
During 2010, 2009 and 2008, we realized tax benefits (deficiencies) of $6.9 million, $0.2 million and $(0.2) million, respectively, related to
share-based compensation plans that were recorded to additional paid-in-capital. The income tax provision (benefit) differs from the
amount of income tax determined by applying the statutory U.S. corporate tax rate to pre-tax amounts due to the following items:
2010 2009 2008
Federal tax at the statutor
y
rate 35.0% 35.0%
(
35.0
)
%
State income taxes, net of federal benefit 1.0 3.8
(
4.2
)
Valuation allowance (27.6)
(
6.2
)
23.2
Chan
g
e in cash surrender value
(
0.5
)
(
1.4
)
1.9
Othe
r
0.4 0.4 1.2
Income tax provision
(
benefit
)
8.3% 31.6%
(
12.9
)
%
The state tax benefit included in the Consolidated Statements of Operations for 2010 is lower than the state rate included in the above rate
reconciliation because the favorable benefit from the decrease in our valuation allowance is included in the valuation allowance in the rate
reconciliation. The state tax provision included in the Consolidated Statements of Operations for 2009 is lower than the state tax rate
included in the above rate reconciliation due to the favorable impact of the utilization of state net operating loss carryforwards for which a
valuation allowance was previously recorded. At January 29, 2011, we had state net operating loss carryforwards of approximately $14
million, substantially all of which expire in 2019 through 2031.